S&P Global — 9 August 2024
Daily Update: August 9, 2024
PET Plastic Recycling Goals Struggle with Supply and Demand
By Nathan Hunt
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Consider the plastic bottle. Made of polyethylene terephthalate (PET) derived from petroleum-based ethylene glycol and purified terephthalic acid, the plastic bottle is meant to be used briefly and discarded. Plastic bottles have become an unwitting symbol of a wasteful and polluting age. However, PET plastic can be recycled. Trade groups around the world have committed to increasing the amount of recycled material in PET products to reduce waste and raw material usage. However, the laws of supply and demand have complicated these initiatives and disrupted plans for increasing post-consumer recycled content in plastic bottles and other PET products.
Governments have been slow to adopt extended producer responsibility policies that incentivize PET recycling. To forestall government action, industry trade groups have adopted voluntary targets for post-consumer or recycled resin. The US Plastics Pact, with signatories such as The Coca-Cola Co., Nestlé and Kraft Heinz, was formed in 2020 and set a 2025 deadline to use an average 30% of post-consumer resin, or responsibly sourced bio-based content, in all plastic packaging. The initiative also includes different goals by material, with beverage bottles targeted to be produced from 25% post-consumer recycled content by 2026 and 60% by 2030. But in June, those goals were pushed back. Now, companies have until 2030 to reach the 30% goal.
Two problems are driving this delay. First, virgin resin remains cheap, pushing down costs for post-consumer material and reducing profit margins for recyclers. Second, there isn’t enough recycled material available.
According to the National Association for PET Container Resources, only about 30% of all PET products in the US are being collected and recycled. That percentage has remained consistent for the past decade, even as percentage goals for recycled materials have increased. Meanwhile, recycled PET demand varies across the country. Locations close to ports have increased demand for virgin resin from Asia, and those near recycling centers, particularly in the Southeast, have increased demand for post-consumer material.
According to a recent McKinsey report, if US Plastics Pact signatories meet their stated recycled-content commitments, demand for recycled PET will increase 15% per year until 2030. However, the supply of recycled PET is expected to only grow at about 1% per year, meaning demand would be triple the available supply by 2030, increasing the cost of recycled PET and incentivizing brands to use virgin resin.
By comparison, the Mexican PET market is at a considerable advantage. The country has the capacity to recycle 70% of the PET end-user packaging in its market. Despite this, Mexico, like the US, will require higher collection rates to capitalize on its advantage.
Today is Friday, August 9, 2024, and here is today’s essential intelligence.
India's Renewable Tenders Market Shows Robust Demand In H1 2024
Competitive tenders continue to drive pipeline growth for renewables and energy storage projects in India. In the first half, about 70 GW of tenders were announced while 38 GW of capacity was awarded to successful bidders. Capacity awarded was normalized in the second quarter with about 7 GW of renewable projects in competitive tenders, as compared to a record 26 GW during the first quarter. These trends align with India's target for 50 GW of annual renewable capacity allocations towards its target of 500 GW of non-fossil fuel installed capacity by 2030.
—Read the article from S&P Global Commodity Insights
Detailed PMI Sector Data Show Global Economic Growth Led By Financial Services As Growth Disparities Widen
Global economic growth trends varied markedly by sector in July. Sustained — but slower — services growth, led by financial services, contrasted with a near-stalling of output growth in the manufacturing economy amid falling goods orders and lower trade volumes. The July PMIs showed a growing global divergence between the fast-expanding service sector and a near-stalling manufacturing economy. Service sector growth ticked up to the second fastest in 13 months, but manufacturing output barely rose to register the weakest expansion seen in the current seven-month upturn.
—Read the article from S&P Global Market Intelligence
Your Three Minutes In Panda Bonds: Why Issuance Is Surging
The year 2024 is shaping up to be the best for panda bond issuance since the market opened in 2005. Panda bond issuance rose 82% in 2023 on a year-on-year basis. As of July 12, 2024, panda bond issuance accounted for 78% of the full-year amount issued in 2023. A panda bond is denominated in Chinese renminbi (RMB) and issued by non-Chinese entities in the China domestic bond market. Chinese-owned entities incorporated outside of mainland China are eligible for issuance. This includes, for example, so-called red-chip companies — those that are incorporated in offshore tax centers such as the Cayman Islands but with businesses based in mainland China.
—Read the article from S&P Global Ratings
The Decisive | Ep. 8 — Container Port Performance Index
What are the top ranked ports in the world? Turloch Mooney, head of the port intelligence and analytics business at S&P Global Market Intelligence, discusses the latest Container Port Performance Index (CPPI) and what the results mean for businesses. Turloch defines port performance and how it is measured through various metrics such as offshore waiting time, berth productivity, throughput and container dwell time. Turloch and host Kristen Hallam also explore the importance of efficient ports in facilitating economic growth, investment and employment opportunities, noting that inefficient ports can lead to shipment delays, reduced competitiveness and higher emissions.
—Listen and subscribe to the podcast from S&P Global Market Intelligence
Greece-Bulgaria Gas Link Operator To Press On With Expansion To 5 Bcm/Year
The operator of the gas interconnector between Greece and Bulgaria is to continue with plans to expand its capacity from the current 3 Bcm/year to 5 Bcm/year despite a lack of market interest in booking additional capacity. Following a successful non-binding market test for the expanded capacity in 2023, ICGB held a binding capacity process last month, with "significantly different" results, an ICGB spokesperson said Aug. 7.
—Read the article from S&P Global Commodity Insights
Magnificent 7 Stocks Stumble, Boosting Peak Views
The mega-cap technology stocks that have pushed US indexes to multiple all-time highs this year took some of the biggest losses in the August market sell-off, stoking speculation that the Magnificent Seven stocks are now beyond their peak. Apple Inc., Tesla Inc., Alphabet Inc., NVIDIA Corp., Microsoft Corp., Amazon.com Inc. and Meta Platforms Inc. lost a combined $1.319 trillion in market capitalization, or about 9%, from July 31 through Aug. 5 as the effects of the Federal Reserve not moving on interest rates, unemployment rising and the unwinding of the yen carry trade triggered a global meltdown in equities.
—Read the article from S&P Global Market Intelligence
Interact New York 2024 (October 15-16, 2024)
Join us on 15-16 October for Interact, our flagship software and solutions conference for public and private markets, in New York. Interact provides a unique opportunity to hear experts from across S&P Global and the wider industry, while networking with peers from the investment management, corporate, banking and broader financial community.
—Register for the in-person event from S&P Global Market Intelligence